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Product quality and firm heterogeneity in international trade

Antoine Gervais ()

Canadian Journal of Economics, 2015, vol. 48, issue 3, 1152-1174

Abstract: This paper quantifies the separate contributions of product quality and technical efficiency in explaining variation in export outcomes across US manufacturing plants. Unlike previous studies that rely on unit values, I estimate idiosyncratic demand from price and quantity information. I find substantial across-plant heterogeneity in demand, and consistent with the quality interpretation, demand is positively correlated with advertising expenditures, wage rates and material costs. I use this variation to explain across-plant heterogeneity in export outcomes. The results show that, in addition to productivity, idiosyncratic demand is an important determinant of selection into exporting and the levels of foreign sales.

JEL-codes: F12 (search for similar items in EconPapers)
Date: 2015
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Working Paper: Product Quality and Firm Heterogeneity in International Trade (2013) Downloads
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Handle: RePEc:cje:issued:v:48:y:2015:i:3:p:1152-1174